Evidence of meeting #3 for Industry, Science and Technology in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cusma.
A video is available from Parliament.
Conservative
Michelle Rempel Conservative Calgary Nose Hill, AB
Would you characterize this less as a victory and more as a concession that allows us to continue the status quo-ish...?
Director of Policy, Canadian Manufacturers & Exporters
What we maintained under the status quo is a victory for sure, but also, all the new chapters that we're doing, the modernization of the agreement, is stuff that was long overdue and that we got in this as well. I'm thinking particularly of the competitiveness chapter. That's something that's specific for manufacturing and that will let the three countries act as a trade bloc. That wasn't in there before, and that's something that has a lot of potential going forward.
Yes, we maintained, but we got a lot of new good stuff as well.
Conservative
Michelle Rempel Conservative Calgary Nose Hill, AB
Sure. I'm sitting at the table, and we have very important sectors of the economy represented here today, but I'm also questioning what our economy will look like 10 years from now for intangibles. Your industries represent production of tangible goods. Is that right?
Mr. Poirier, did your industry liaise with any associations, or did any of your member associations talk about the fact that intangibles—data, IP, etc.—might be under threat the way that this agreement has been negotiated, especially given the six-year renegotiation clause?
Director of Policy, Canadian Manufacturers & Exporters
Certainly for manufacturing it's a win, this agreement. Other sectors have concerns and we share those as well, from just a general business perspective, but the way we look at it is where this could have gone. What stability it returns to the market is the good thing.
Other than that, based on those merits alone.... We can always be concerned about the other issues that are plaguing investment in Canada in general, and we could sit down and have a long discussion about all of those, but as for what we have within our control, that is, this trade agreement and passing it to remove at least one level of uncertainty, we should do it. For everything else that we can't control beyond our borders in terms of economic challenges, let's park that. We can control this.
Conservative
Michelle Rempel Conservative Calgary Nose Hill, AB
Just to follow up on that, because I'm running out of time, do you think the six-year provision—
Liberal
The Chair Liberal Sherry Romanado
That's your time. Thank you.
We'll now move to Mr. Ehsassi.
You have six minutes.
February 24th, 2020 / 8:30 a.m.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Thank you, Madam Chair.
My first question is for you, Mr. Herman. First of all, thank you very much for appearing before our committee. You come at this with a wealth of experience, so we're very grateful that you made yourself available.
Mr. Herman, on several occasions you emphasized that this deal is concluded, signed and ratified. You said that the deal is done, that it's essentially a fait accompli.
For the sake of my colleagues, would you explain to us what would happen if any amendments were proposed? Would we not risk losing all those hard-fought advantages that we gained during the negotiations?
Counsel, Herman and Associates, As an Individual
First of all, Mr. Ehsassi, in response to your questions, before you entered politics you were in the trade law field. You and I know one another from days gone by, when we were both practising international trade, so you have an expertise as well.
Let me say this. The bill that you are examining, particularly the clauses that you're looking at, are in line with the negotiated agreement. Parliament can look at implementing legislation and can tweak or make modest changes where necessary to adjust the legislation so that it complies with the negotiated agreement.
Were Parliament to make changes to the bill that were inconsistent with the negotiated agreement, Canada would not be in a position to ratify. Canada can only ratify an international treaty—which this is—when it is in a position to fully comply with the provisions of that treaty. If changes were made to the bill that were inconsistent with what Canada has concluded, signed and not yet ratified, the Government of Canada could not ratify. If the bill were rejected, Canada could not ratify.
The committee has to consider the implications of the non-ratification of an agreement that was painstakingly negotiated under very difficult circumstances, that has been approved by the U.S. Congress through all of those machinations that you all know about, and that has been signed and ratified by the President of the United States. It would be unprecedented in Canadian history, unprecedented—I have to emphasize that—for a trade agreement to be refused by this committee or by the House of Commons or by Parliament in general. It has never happened.
It would be an astonishing result, and it would negate, in my view, not only our trade and economic relations with the United States but long-term political relations with that country. Also, it would put in doubt the future of the NAFTA, because without this trade agreement we'd be relying on the NAFTA, and whether the NAFTA would survive if Canada did not ratify this agreement is doubtful.
Those are my views.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Thank you.
I have another question. In the event that we were not to ratify this, am I correct in assuming that the United States and Mexico could proceed without us?
Counsel, Herman and Associates, As an Individual
Yes, they could and I believe they would.
It is in the interest of the United States to conclude a deal with Mexico because of the provisions that Mr. Cassidy outlined in terms of increasing U.S. content in auto production and disciplining the Mexican side in terms of auto production. The U.S. and Mexico could, and I believe they would, leaving Canada very much out in the cold and putting the future of our trading and political relationships at great risk. There should be no doubt about that, Mr. Ehsassi.
Liberal
Ali Ehsassi Liberal Willowdale, ON
I'll now turn to you, Mr. Poirier. At one point during your testimony, you emphasized that you were “part of the process”. Were you satisfied with the consultations that were taking place between the government and your organization during the year that we were negotiating or renegotiating CUSMA?
Director of Policy, Canadian Manufacturers & Exporters
Yes. We deserve to have a seat at the table when we're talking about manufacturing and trade, just by the sheer number of jobs the industry represents, but I think so.
We were cognizant of the fact that the government had to simplify the task and go and negotiate the deal. At that point, only a few people could do it, but in the process leading up to that, we felt we were adequately consulted, certainly, and part of the process. I know that a great number of other groups, not just business stakeholders but also from society, felt that they were more included in this agreement.
Liberal
Ali Ehsassi Liberal Willowdale, ON
Thank you.
Mr. Cassidy, you also indicated that Unifor poured a lot of resources into these renegotiations. Were you satisfied with the consultations?
President, Unifor Local 444
Yes. We were part of the discussions. Unifor welcomed, obviously, NAFTA's renegotiation. There was a myth perpetuated in the business world that NAFTA was too delicate to touch, and that's why it was very important to us, but it was bologna, to tell you the truth, that NAFTA was too delicate to touch.
We had an opportunity at the time. We were very happy that we were there and were part of the solution in terms of where we are today.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Madam Chair.
My first question is for Mr. Herman.
Mr. Herman, you talked about the importance of quickly ratifying this agreement, but what is done quickly sometimes leaves traces that can disadvantage some parties in that agreement. What are your thoughts on that?
Second, is it possible to protect the aluminum industry by harmonizing Canadian legislation? How do you think we could do that?
Counsel, Herman and Associates, As an Individual
Concerning aluminum, there is a certain level of protection in this agreement that is very important for the aluminum sector.
Regarding molten and cast aluminum, we have reached an agreement with the Americans that will make it possible to revisit this issue within a few years. I'm sure you are aware of that, Mr. Lemire. In that case, I think the aluminum sector is well protected, but we will have an opportunity to reopen the issue of molten and cast metal within a few years. This is a very important outcome for the aluminum sector, especially in Quebec.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
I would like to put my next question to Mr. Azzopardi on this issue.
As you are involved in manufacturing, can you compare the repercussions this agreement will have on the steel industry with those it will have on the aluminum industry?
In terms of production and supply, what would you say are the constraints imposed by this free trade agreement?
Director, International Affairs, Laval Tool & Mold Ltd., and past Chairman, Canadian Association of Mold Makers
With regard to the effects on production and supply in this agreement, as long as they go into finished goods, I believe it will help. When we're using Canadian or U.S. aluminum or steel for finished goods, I believe the agreement has lots of opportunities.
From a raw product standpoint, I believe the agreement has good provisions, but I don't necessarily think the government at this time can uphold those provisions when it comes to RVC. We have a concern that steel and aluminum dumping will still continue as long as Canada does not adopt stronger measures to protect against that dumping from low-cost countries. There are examples already of where Canada as a country is receiving those products and RVC isn't necessarily being calculated correctly. We believe this is an area that should see some focus after the agreement is in place.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
In terms of manufacturing, my understanding is that there is a difference between the origin of aluminum and the origin of parts. In the free trade agreement, the famous percentage of 70% is often brought up. When it comes to aluminum, for you, 70% of aluminum is different from 70% of parts, isn't it? Are you able to recognize this?
Director, International Affairs, Laval Tool & Mold Ltd., and past Chairman, Canadian Association of Mold Makers
We recognize that, and very much so. The raw product itself has one classification, but it changes classifications once it becomes a fabricated product. The way in which you calculate the regional value content is very important. It's very easy for a manufacturer, let's say from a low-cost country, to establish themselves in Canada, make minor adjustments to that product and call it Canadian origin. We're suggesting that Canada adopt a longer and more detailed list of products, use a more defined way to calculate regional value content, and then put in a stronger methodology for manufacturers to use in order to strengthen the ability to stop countries such as China from dropping in product, simply making small adjustments and changing the value.
This is an area that we would actively participate in, from this point forward, to help the government with those products on an individual basis. It is definitely an area that we're seriously concerned about. In the past, this has been taken advantage of by low-cost countries.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Mr. Azzopardi.
Mr. Poirier, first off, do you speak French?
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
The issue of the Buy American Act is often part of your battles.
As Canadians, wouldn't we have benefited from using the same protectionist strategy for certain aspects of the negotiations?
Director of Policy, Canadian Manufacturers & Exporters
The buy America provisions are a big issue for the manufacturing industry, simply because it creates this bizarre situation in which, if one side implements buy America and you don't retaliate in kind, it creates the incentive for businesses to locate in the jurisdiction where it can have access to both markets and not the other way around. We have always been a strong proponent for free trade, for free and open markets, but if one side's not playing fair, it's incumbent upon us to respond in kind.
Certainly, we would have loved to see more access to the government procurement market and to start to crack down those buy America and buy American provisions. We understand that it was a difficult negotiation. However, the government and all parliamentarians should be working on increasing that access, because that government procurement market is huge in terms of being able to increase the growth of Canadian manufacturing, if we can tap into it.